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Microsoft Axes 3,200 Xbox Jobs and Pivots Its Top Studio to Build a New Fallout Game

The Verge·Thursday, 9 July 2026
Microsoft Axes 3,200 Xbox Jobs and Pivots Its Top Studio to Build a New Fallout Game

As part of a sweeping Xbox 'reset', Microsoft is laying off 3,200 workers, shutting down studios, and redirecting its remaining teams toward 'higher priority projects.' Obsidian Entertainment — the studio behind Grounded and The Outer Worlds — has cancelled multiple projects and is now working on a new Fallout title instead of the previously planned Avowed sequel. The restructuring represents one of the biggest shake-ups in gaming industry history.

Why It Matters

Microsoft's Xbox is a major global gaming platform with a large Indian user base on Game Pass. Massive layoffs and studio closures directly affect the games that will — or won't — get made in the years ahead.

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